Final project.doc

Topic Introduction

Financial performance analysis.

Financial analysis is the process of identifying the financial strengths and

weakness of the firm by proper establishment of the relation ship between the items of

the balance sheet and profit and loss account. Financial Analysis can be undertaken by

management of the firm, land by parties outside the firm viz., owners, creditors,

investors, the nature of analysis will differ depending on the purpose of the analysis.

Trade creditors are inserted in firm’s ability claims over a very short period of

time. Their analysis will, therefore, confine to the evolution of the firm’s liquidity

position.

Suppliers of long term debt, on their hand, are concerned with the firm’s long

term solvency and survival. They analyze the firm’s probability over time, its ability to

generate cash to be able to pay interest and repay principal and the relationship.

Between various source of funds long term creditors to analyze the historical

financial statements to make analysis about its futures solvency and profitability.

Over view of Financial Management

1. Concept of Financial management:

Financial management is a activity, which is concerned with providing

quantitative information, primarily financial in nature and that, may be needed for

making economic, decisions regarding reasoned different alternate course lf action.

Thus, financial management is a process of identification, accumulation, analysis

preparation, interpretation, and communication of financial information to plan, evaluate

and control.

SITAMS1

“Financial Management is an area of financial decision making, harmonizing

individual motives and enterprise goals”

-Weston & Brigham

Financial Management is the operational activity of that is responsible for obtaining

and effectively utilizing the funds necessary for efficient operations.’

- Joseph & Massic

2. Objective: The goal of financial management should be to achieve the objective of

business. Main objectives are profit maximization and wealth maximization.

2.1 Profit maximization:

Maximization of profits is regarded as the main objective of a business

enterprise.

Why profit maximization?

Each company collects its finances by way of issue of shares to the public.

Investors purchase shares with the hope of getting maximization profits from the

company. To meet this, company’s goal should be earn maximum profit out of available

resources. Financial management evaluates how the funds are procured and used. It

involves a sound judgment combined with a logical approach to decision making. This

call for evaluation of the conditions of alternate uses of funds and allocation of resources

after considerations of alternate4 uses of funds all0ocations of resources after

considerations of production and marketing inter relationships. Financial management is

concerned with the efficient use of resource mainly capital funds. Profit maximization

should serve as the basic criterion for decisions arrived at by financial manager and

business firms.

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2.2 Wealth maximization:-

Maximization of wealth is a more viable objective of financial management the.

The same objective, if expressed in other terms, would convey the idea of net present

worth maximization. Any financial action which has a net present worth is a desirable

one and should be undertaken. Wealth of a firm is reflected in the maximization of

present value of the firm i.e., the present worth of firm. This may be readily measured if

the company has shares that are held by the public. And to a shareholder, the term

‘Wealth ‘ is reflected in the amount of his current dividends and the marketing price of

share.

Ezra Solomon has defined wealth maximization objective as “the gross present

worth of a course of action is equal to the capitalized value of the flow of future expected

benefits, discounted (or capitalized )at a rate which reflects the certainly. Wealth of net

present worth is the different between gross present worth and the amount of capital

investment required to achieve the benefits”. From this, one thing is present value of

owner’s investment in a company and the implementation of projects that will increase

the market value of firm’s securities.

Other Objectives: In addition to the foresaid, the following are other objectives of financial

management. Ensuring a fair return to share holders, building up resources for growth

and expansion, ensuring maximum operation efficiency by efficient and effective

utilization of finances and ensuring financial discipline in the organization.

1. :Financial decisions:

Decisions have been categorized in to two broader groups and such as long-term

financial decisions. And it includes investment decision, financing decision and dividend

decision. The latter are decisions concerning cash, investments (marketable securities),

receivable and inventory.

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3.1 Long-term financial decisions:-

The long-term financial decision pursued by the manager has significant effects of

the value of a firm. The results of these decisions are not confined to a few months but

extend over several years and these decisions are irreversible. It is, therefore, necessary

that before committing scarce resources of the form a careful exercise should be

undertaken to measure the likely costs and benefits of vario0us decisions.

Investment decisions: Investment decision is concerned with the effective utilization of funds in one

activity of the other. A business firm requires funds for investing in various fixed and

current assets. Before taking any final decision. Their relative profitability must be

examined with the help of financial tools. Such as cost of capital, capital budgeting

techniques etc.,

Financing decision: Financing decision is also known as capital structure decision .Financing decision

involves the determination as to how the total funds required by the firm will be made

available. There is a number of sources form which funds can be raised. The most

important sources of financing are equity and debt. The central task before the financial

manager is to determine the proportion of equity and debt. The different types of

securities are equity shares; preference shares bonds, debentures, and by rid.

Accompany cannot depend on only one source of capital. Hence, a varied

financial structure is needed. But before using any particular source of fund, relative cost

of capital degree of risks etc., should be thoroughly examined. This comes within

purview of financing decision.

Dividend decision: The next crucial financial decision is the dividend decision. This is the basis of

dividend payment policy, reserve policy etc., the dividends are generally paid as some

percentage of earnings o paid-up capital. However, dividend policy pursued by

management may be generally stable in character. Stable dividend policy implies the

payments of same earnings percentage with only small variations depending up on the

pattern of earnings. The amount of undistributed profit is called ‘retained earnings’.

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3.2 Short-term financing decision:-

The job of the financial manager is not just limited to the long-term financial

decision aiming at safeguarding the firm against illiquidity of insolvency. Surveys

indicate that the largest portion of a financial manager’s time is devoted to the day-to-day

internal operations of the firm, may be less of appropriate

Tools of financial management: Financial many subsumed under the heading of working capital management.

Management is concerned with raising financial resources and their effective

utilization towards achieving the organization goals. The requires application of

appropriate financial tools. The term financial refer to may logical method or technique

to be employed for the purpose of accomplishing the goals. Following are the important

tools that by used by financial manager in the performance of his job.

4.1 Financial leverage:-

Financial leverage is another tool, which helps the financial manager in increasing

the return to equity shareholders.

4.2 Cost of capital:-

Cost of capital helps the financial manager is deciding About the source from

which the funds are to be raised. Incase of different source of finance, viz. Shares,

debentures, loans from financial institution, banks, public deposits, etc., the financial

manager takes in to account is also capital and opts for the source which is the cheapest.

The cost of capital is also taken into account while determining the optimum capital

structure.

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4.3 Capital budgeting techniques:-

a. pay back period:

b. Internal rate of return;

c. Average rate of return:

d. Net present value and

e. Profitability index.

These would help the financial manager in selecting the among alternate capital

investment proposals.

4.4 Ratio analysis:

Ratio analysis is the method of evaluating different aspect of a firm. Different

ratios serve different purposes. Ratios are among the best known the best known and

widely used tools of financial analysis. Investors are primarily inserted in the profitability

and leverage of the company. The profitability and leverage of the company. The

profitability ratios are on investment, net profit margin, earnings per share, dividend

cover etc.

4.5 Funds flow and cash flow analysis:-

Funds low and cash flow analysis help the financial manager to determine whether

funds have been procured from the best available source and they have been utilized in

the best possible way. Projected funds flow statement and projected cash flow statement

help the financial manager in estimating or arranging for the future working capital of

cash needs.

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INDUSTRY PROFILE

INTRODUCTION

One cannot prevent uncertainties but can reduce the losses occurring with such

happening. The minimization of loss is the preliminary measure to cope with the possible

uncertainty in future. Insurance is an assurance to share the expected loosed in order to

reduce the burden of the loss. Compensation is paid by the insurance company to the

affected. Insurance is as old as civilization. Uncertainties occur due to social, cultural,

political of ethical factors. At times natural calamities play a major role. To meet such

uncertainties the business of insurance assumes multi- dimensions.

Today’s insurance industry has resemblance of 16th or 17th century. In fact from 16th

century insurance industry gradually developed. ”A seed we Best regards as in 16 th century

which turned out to be a big tree now and is still growing”

WHAT IS INSURANCE?

The business of insurance is related to the protection of the economic value of

asset. Every asset has a value. The asset would have been created through the effects of the

owner, in the expectation that either through the income generated there from or some other

output, some of his needs would be met. In the case of a motorcar it provides comfort and

convenience in transportation. There is no direct income. There is a normally expected

lifetime for the asset during which time it is expected to perform.

How ever, if the asset gets lost earlier, being destroyed or made nonfunctional, through an

accident or other unfortunate event , the owner and house deriving benefits may suffer.

Insurance is a mechanism that helps to reduce such adverse consequences.

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MEANING OF INSURANCE

Insurance means “In giving security”. It is a contract securing compensation for loss,

damage, injury or death on payment or premium. The parties involved in the contract are:

(1). Insurer (2). Insured

A company or corporation that undertakes the business or insuring against loss,

damage or death is called insurance company. Certificate of insurance is called insured

policy. It is “A document containing the contract made by an insurance company with a

person whose property or life is insured”.

PURPOSE AND NEED OF INSURANCE

Assets are insured, because they are likely to be destroyed are made non functional

through an accidental occurrence. such possible occurrences are called perils . fire, floods,

breakdowns, lighting, earthquakes , etc, are perils . The damage that these perils may cause

to the asset is the risk. the risk only means there is a possibility of loss or damage , it may or

may not happen . Insurance is done against the contingency that it may happen insurance is

relevant only if there are uncertainties. No uncertainty no insurance. There are other

meanings of the term risks. To an ordinary man risk means exposure to danger in insurance

practice risk is also used to refer the peril or loss-producing event. For example, it is said that

fire insurance converts the risks of fire, explosion, cyclone, flood etc. Again it is used to refer

to the property covered by insurance, for example, a timber constructions is considered to be

add risks for fire insurance purpose . Here the term risk refers to subject master of insurance.

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Insurance takes care; it does not protect the asset. It does not prevent loss due to the

peril. The peril can sometimes not be avoided, through insurance. But at times it can be

avoided through safety and damage control management. Insurance only tries to reduce the

impact of the risk on the owner of the asset and those who depend on the asset. It companies,

but not fully .only economic or financial losses can be compensated. The concept of

insurance has been extended beyond the coverage of tangible asset. Exporters run the risk of

the importers in the other country defaulting as well as political disturbances. Doctors run the

risk of being charged with negligence and subsequent liability for damages, thus insurance is

extended to intangible the “purpose of the insurance is to safeguard against misfortunes by

making good by making good the losses of unfortunate few through the help of fortunate

many”. Thus the essence of insurance is to share losses and substitute uncertainty.

INSURANCE BECOME POPULAR AND A FAIR ARRANGEMENT FOR THE REASONS:

1. People are exposed to risks and the consequence of such risks is difficult for

single individual to bear.

2. It becomes bearable when the community shares the burden.

INSURANCE AS SOCIAL SECURITY TOOL

It is recognized as the provision of social security as is an obligation of the state. In

fact, the subject has been included in list III of the seventh schedule of the constitution of

India as “social security and social insurance” and ”welfare of labor including, inter aila,

liability for workmen’s compensation, etc. ”further ,article 41 of the directive principles of

inter alia , sickness and disablement and in other cases of underserved want

The various laws, passed by state for this purpose involve the use of insurance, compulsory

or voluntary, as a tool of social security. The employee’s state insurance corporation pays for

the expenses of sickness, disablement, maternity and death and death and for the

maintenance of hospital dispensaries, etc, for the benefit of industrial employees and their

families, who are insured persons. The scheme operates in certain industrial areas as notified

by the government.

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Insurance play an important role in the social security schemes sponsored by the

government. Example is solarium scheme, the personal accident social security scheme and

Hut Insurance Scheme. The benefits not only the insured farmers but also the community

directly and indirectly in terms of maintaining agricultural production and rural employment

and contribution to economic growth.

All the rural insurance schemes, operated on a commercial basis, are designed

ultimately to provide social security to the rural families. The insurance industry has devised

special insurance schemes, at subsidized rates of premium, to cover cattle and other livestock

and various other government sponsored programmers and financial institutions..

ROLE OF INSURANCE IN ECONOMIC DEVELOPMENT

For economic development, investments are necessary. Investments are made out of

savings. A life insurance company is a major instrument for the mobilization of savings of

people, particularly from the middle and lower income groups. These savings are channeled

into investment for economic growth.

An insurance company’s strength lies in the fact that huge amounts are collected and

pooled together. These amounts come by way of premiums. Every premium represents a

risk that is covered by that premium. In effect, there fore these vast amounts represents

pooling of risks. The managements of insurance companies are required to keep this aspect

mind and make all its decision in ways that benefits the community. This applies also to its

investment. That is why successful insurance companies would not be found investing in

speculative ventures.

The system of insurance company provides numerous direct and indirect benefits to

the individual and his family as well as to industry and commerce and to the community and

the nation as a whole. Those who insure from the consequence of the loss that may be

caused by the accident for fortuitous event. Insurance, thus in a sense protects the capital in

industry and releases the capital for further expansion and development of business and

industry.

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COMPANY PROFILE

Bajaj Allianz Life aims high

Sam Ghosh, CEO, Bajaj Life Insurance Company Limited, who took over this

January, outlines his aggressive growth strategy. Venkatachari Jagannathan reports

Bajaj Life Insurance Company Limited — a 74:26 joint venture between Bajaj Auto

Limited and Allianz AG, Germany (formerly Allianz Bajaj Life Insurance Company

Limited) — under a new team headed by Sam Ghosh, CEO, has taken the competition

head-on, leaving industry watchers surprised at its rapid pace of growth.

Ghosh himself is a newcomer to the company, earlier having steered the Rs480

crore-Bajaj Allianz General Insurance Company to the second position in the Indian

private sector insurance sector.

In a span of just eight months, Bajaj Allianz Life (premium income Rs220 crore)

has jumped three paces to occupy the fourth slot in the 13-strong life insurance industry.

Today the company is in the midst of pursuing its twin corporate 'dream' goals —

to close this fiscal with a premium income of Rs750 crore and occupy the number three

slot displacing the incumbent Birla Sun Life Insurance Company Limited.

Given the daily collections — over Rs1 crore — and its month-on-month growth,

the second may come true sooner.

According to the Insurance Regulatory and Development Authority (IRDA) figures, the

new premium difference between Bajaj Allianz Life and Birla Sun Life at the end of

August 2004 was Rs37.5 crore. Rival Birla Sun Life has taken the threat seriously.

COMPANY DETAILS

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May 26, 2006

Bajaj Allianz Life Insurance Company Ltd. is a joint venture between two leading conglomerates -Allianz AG, one of the world's largest insurance companies, and Bajaj Auto, one of the biggest 2 and 3wheeler manufacturers in the world.

Bajaj Allianz Life Insurance

Is the fastest growing private life insurance company in India

Currently has over 4,40,000 satisfied customers

Has a presence in more than 550 locations with 60,000 Insurance Consultant

providing the finest customer service.

August 2004 was Rs37.5 crore. Rival Birla Sun Life has taken the threat

seriously

SHARED VISIONA household name in India teams up with a global conglomerate...

Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj group is the largest

manufacturer of two-wheelers and three-wheelers in India and one of the largest in the

world. A household name in India, Bajaj Auto has a strong brand image & brand loyalty

synonymous with quality & customer focus. With over 15,000 employees, the company

is a Rs. 4000 crore auto giant, is the largest 2/3-wheeler manufacturer in India and the 4th

largest in the world. AAA rated by Crisil, Bajaj Auto has been in operation for over 55

years. It has joined hands with Allianz to provide the Indian consumers with a distinct

option in terms of life insurance products. As a promoter of Bajaj Allianz Life Insurance

Co. Ltd., Bajaj Auto has the following the offer

Financial strength and stability to support the Insurance Business.

A strong brand-equity.

A good market reputation as a world class organization.

An extensive distribution network.

Adequate experience of running a large organization.

A 10 million strong base of retail customers using Bajaj products.

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IRDA CERFICATE

Experience in the financial services industry through Bajaj Auto Finance Ltd

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ABOUT BAJAJThe Bajaj Group is amongst the top 10 business houses in India. Its footprint

stretches over a wide range of industries, spanning automobiles (two-wheelers and three-

wheelers), home appliances, lighting, iron and steel, insurance, travel and finance.

The group’s flagship company, Bajaj Auto, is ranked as the world’s fourth largest two-

and three- wheeler manufacturer and the Bajaj brand is well-known in over a dozen

countries in Europe, Latin America, the US and Asia.

Founded in 1926, at the height of India's movement for independence from the British,

the group has an illustrious history.

The integrity, dedication, resourcefulness and determination to succeed which are

characteristic of the group today, are often traced back to its birth during those days of

relentless devotion to a common cause. Jamnalal Bajaj, founder of the group, was a close

confidant and disciple of Mahatma Gandhi. In fact, Gandhiji had adopted him as his son.

This close relationship and his deep involvement in the independence movement

did not leave Jamnalal Bajaj with much time to spend on his newly launched business

venture. His son, Kamalnayan Bajaj, then 27, took over the reins of business in 1942. He

too was close to Gandhiji and it was only after Independence in 1947, that he was able to

give his full attention to the business.

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Bajaj Group

Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj group is the largest

manufacturer of two-wheelers and three-wheelers in India and one of the largest in the world.

A household name in India, Bajaj Auto has a strong brand image & brand loyalty

synonymous with quality & customer focus.

A STRONG INDIAN BRAND- HAMARA BAJAJ

One of the largest 2 & 3 wheeler manufacturer in the world

21 million+ vehicles on the roads across the globe

Managing funds of over Rs 4000 cr.

Bajaj Auto finance one of the largest auto finance cos. in India

Rs. 4,744 Cr. Turnover & Profits of 538 Cr. in 2002-03

It has joined hands with Allianz to provide the Indian consumers with a distinct

option in terms of life insurance products.

About Bajaj Allianz Life Insurance Company Ltd.

Bajaj Allianz Life Insurance Co. Ltd. is a joint venture between two leading

conglomerates- Allianz AG, one of the world's largest insurance companies, and Bajaj

Auto, one of the biggest 2 and 3 wheeler manufacturers in the world.

Bajaj Allianz Life Insurance

No.1 Private Life Insurance Company in India for 2006-07

Growth rate of 216%for financial year 2006-2007

Over 15,00,000 satisfied customers

A countrywide network of 700+ offices

Assets under management Rs. 3,324 cr.

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Shareholder capital base of Rs. 500

Indian operations:

Bajaj Allianz Life Insurance Company Limited is a joint venture between two

leading conglomerates Allianz AG and Bajaj Auto Limited. Characterized by global

presence with a local focus and driven by customer orientation to establish high earnings

potential and financial strength, Bajaj Allianz Life Insurance Co. Ltd. was incorporated

on 12th March 2001. The company received the Insurance Regulatory and Development

Authority (IRDA) certificate of Registration (R3) No 116 on 3rd August 2001 to conduct

Life Insurance business in India.

Bajaj Allianz- THE PRESENT

Product tailored to suit your needs

Decentralized organization structure for faster response

Wide reach to serve you better – a nationwide network of 700 + branches

Specialized departments for Bank assurance, Corporate Agency and Group

Business

Well networked Customer Care Centers (CCCs) with state of art IT systems

Highest standard of customer service & simplified claims process in the industry

Website to provide all assistance and information on products and services, online

buying and online renewals.

Toll-free number to answer all your queries, accessible from anywhere in the

country – Call Now 1800 22 5858 and a strong tele-marketing and Direct

marketing team.

Swift and easy claim settlement process

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Focused Sales Network

Tie Ups with Banks

Pioneers of Bancassurance in India...

Having pioneered the phenomenon, Bancassurance is one our core business strategies. Two of our strong Banc assurance tie-ups are:

Standard Chartered Bank

Syndicate Bank

We have developed a range of life insurance products exclusively for our Bancassurance

partners. Also, our products are customized to suit specific needs of banks.

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PRODUCT PROFILE

The Bajaj allianza “child gain” Plan:

Taking care of a child is perhaps the most important job a parent can have. It is but

natural that you would like to give your child your best. And therefore, this is the time when

careful financial planning can help you fulfill the aspiration that you have for your children.

The Bajaj Allianz child gain solutions help you to enjoy the joys of parenthood responsibly,

with the reassurance of a secure future for your child.

What does Bajaj allianz “child gain” plan offer you?

Bajaj Allianz child offers a wide array of solutions that allows you to plan for your

child’s future by providing you with as many as 4 distinct and unique options.

Option 1 : child gain 21

Option 2 : child gain 24

Option 3 : child gain 21 plus

Option 4 : child gain 24 plus

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The Bajaj Allianz New Unit Gain Plan:

Bajaj Allianz New unit gain comes with a host of features that allows you to have

the best of both worlds – protection and investment, with flexibility like never before.

Key features of this plan are:

Guaranteed death benefit.

Choice of investment funds with flexible investment management; you can

change funds at any time.

Providing for full/partial withdraws any times after three years, provided three

full years’ premiums are paid.

Unmatched flexibility – to match your changing needs.

Maturity benefit equal to the fund value payable on the date of maturity.

The “Bajaj Allianz new unit gain plus” plan:

The Bajaj Allianz new unit gain plus plan comes with a host of features that allows

you to have the best of both worlds – protection and investment with flexibility like never

before. Some of the key features of this plan are:

Guaranteed death benefit

Choice of 5 investment funds with flexible investment management: you can change

funds at any time.

Attractive investment alternative to fixed – interest securities.

Choice of investment funds with flexible investment management: you can change

funds at any time.

Attractive investment alternative to fixed – interest securities

Provision for full/partial withdrawals any time after three years from commenced of

the policy provided three full years’ premiums are paid.

Unmatched flexibility to match your changing needs.

Maturity benefit equal to the fund value payable on date of maturity.

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How does Bajaj Allianz Cash Gain?

This plan pays out a guaranteed amount on survival at the end of every 1/5th of the

policy term selected. A total of 75% of the sum assured is paid out in the first 4 cash

benefits. On maturity, 50% of the sum assured is paid along with accrued bonuses. Hence the

total cash/survival benefit distributed under this plan comes to more than 100% 0f the sum

assured – in fact 125% of the sum assured.

1st Cash Benefit 15% of Sum Assured

2nd Cash Benefit 25% of Sum Assured

3rd Cash Benefit 25% of Sum Assured

4th Cash Benefit 25% of Sum Assured

50% on maturity of sum Assured + accrued bonuses

.

The benefits will further increases by way of accrued bonuses that are distributed at

maturity or on death, if earlier. In case of maturity or death after 15 full policy years, the

company may pay an additional terminal bonus for in – force policies.

The “Bajaj Allianz Invest Gain” plan:Bajaj Allianz Invest Gain is a specially designed plan that offers unique combinations

of benefits to help you develop a sound financial portfolio for your family. Among the many

unique benefits, the most significant is the family income benefit (FIB) that sustains the

family by compensating the loss of income due to death or permanent disability. This is one

– stop shop solution that can keep you and you family financially protected at times when

you need it most. In a financial world where choices can drive you crazy, your search for the

perfect life insurance plan stops here.

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Organization Structure

Managing Director

SVP Sales Tied SVP Sales Alterna

VP- Regions VP – Regions

Branch Managers Branch Managers

Sales managers Sales Managers

Life Advisors Sales Associates

Corporate Agents,

Brokers, Banc

Unit Linked Investment Plans (Ulip) Of Bajaj Allianz Life Insurance

Brief Explanation on Ulip

Unit –linked insurance plans (ULIP) have become something of a range with their

‘promise’ of market-linked returns combined with the dual benefit of insuring your life

form eventualities.

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To put it simply, ULIPs attempt to fulfill investment needs of an investor with

protection/insurance needs of and insurance seeker. ULIPs work on the premise that

there is class of investors who regularly invest their savings in products like fixed

deposits (EDs) coupon-bearing bonds, debt funds, diversified equity funds and stocks.

There is another class of individuals who take insurance to provide for their family in

case of and an eventuality. So typically both these categories of individuals (which also

overlap to a large extent) into into a single product. This saves the investor / insurance-

seeker the hassles of managing and tracking a portfolio of products.

Novel and noble as it appears investor /insurance-seekers rarely understand the cost

implications of the marriage between investment and life insurance. To be sure, it is

intricate and not everyone is able to unravel it. ‘Unit – linked products are designed to

put control in the hands of the customer. While some customers are comfortable with

this, there are others who require some more explanation about the features. This is

provided by that are given to customers. Moreover, customers get a benefit illustration,

which clearly illustrates the up-front, investment, and mortality charges that are lived on

the premium, and shows how the monies will grow overtime, under a certain set of

assumptions’.

First and foremost, investors need to understand that a ULIP is a bundled

product of their investments and their investment and their investments insurance

proceeds. So if you have a ULIP invested in equities, you are exposing your life

insurance monies as well as your invisible surplus assets get an equity flavors, the same

cannot be said about your life insurance monies as well as your invest able surplus to the

vagaries get and equity flavors, the same cannot be said about your life insurance monies,

which to a large extent should be sacred. The want to see is your life insurance monies,

which to a large extent should be sacred. The volatility in equity markets can disturb the

calmest slide in equity markets. ‘A ULIP policy holder has the option to invest in a

variety of funds, depending on his risk profile. If one does not have the appetite to invest

in equity, they can choose a debt of balanced fund’.

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However, the structure of a ULIP takes care of quite a bit of the uncertainty in the

markets. Insurance companies understand the need to give insurance-seekers the

flexibility to rethink their investment strategy in view of market histrionics. There is

an option for the insurance –seekers the flexibility to rethink their investment strategy

in view of market histrionics. There is an option for the insurance-seeker to switch to

another plan with a lower of zero equity components to stem the loss in a falling

equity market. ‘The switch option allow customers to switch between fund options,

there by making adjustments to any perceived risks ‘BAJAJ ALLIANZ LIFE

INSURANCE ‘Allows policyholders to make this switch four times a year at no cost,

with Rs. 100 at every additional switch after that. However, for investors to make the

right switch they need to track markets actively and be well-informed, which is

actually the job of the investment advisor/consultant.

HDFC Standard Life Insurance Company

The company was incorporated on 14th August 2000 under the name of HDFC

Standards life Insurance company Limited.

Our ambition from as far back October 1995 was the first private company to re-

enter the life insurance market in India. On the 23ed October 2000. this ambition was

realized when HDFC Standard life was the only life company to be granted a certificate

of registration.

HDFC are the main shareholders in HDFC standard life, with 81.4%,while

standard life owns 18.6%. Given standard life’s existing investment in the HDFC Group,

this is the maximum investment allowed under current regulations.

HDFC and standard life have a long and close relationship built upon shared

values and trust. The ambition of HDFC standard life is to mirror the success of the

parent companies and be the yardstick by which all other insurance company’s in India

are measured.

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Bajaj Allianz

Bajaj Allianz life insurance Co. Ltd. Is a joint venture between two leading

conglomerates, Bajaj Auto , one of the biggest 2 and 3 wheeler manufactures in the world

and Allianz AG, one of the world’s largest insurance companies;

Bajaj Allianz is one of India’s leading financial institutions, offering complete

financial solutions; you can invest in one life insurance plan that can take care of all your

changing requirements through out your life. This plan has been designed to provide you

with maximum flexibility, so that you do not have to worry about your changing needs

Bajaj Allianz unit gain offers the unique option of combining the protection of life

insurance with attractive prospects of investing in securities. You can choose the

investment funds you want to invest your money, securities. You can choose the

investment funds you want to invest your money, providing you with an opportunity to

have a direct stake in the performance of the financial markets. You also benefit form

attractive tax advantages and can protect your loved ones against unfortunate events.

Bajaj Allianz life Insurance

Is the fastest growing private life insurance company in India

Currently has over 4,40,000 satisfied customers

Has a presence in more than 550 locations with 60,000 Insurance Consultant

providing the finest customer service.

August 2004 was Rs37.5 crore. Rival Birla Sun Life has taken the threat

seriously

SITAMS24

Vision:

To be the fist choice insurer for customers.

To be the preferred employer for staff in the insurance industry.

To be the number one insurer for creating shareholder value

Mission: As a responsible, customer focused leader, we will strive to understand the insurance

needs of the consumer and translate into affordable products that deliver value for money.

The Five funds offered are as under.

Equity Fund- This fund provides the scope of high appreciation over a long term.

The fund will primarily invest in equities & is expected to match returns given by NSE

NIFTY. This fund will invest at least 90% in equities and maximum 10% In cash.

Equity Gain Fund – The investment objective of this is to provide capital

appreciation through investment in select equity stocks that have the potential for high

capital appreciation. This fund will invest at least 90% in equities and maximum 10% in

debt & cash instruments.

Debt Fund – This fund provides the scope for steady returns at low risk though

investment in high quality fixed income securities. This fund will be invested fully in

debt instruments.

Balanced Fund- the balanced fund is primarily for those who prefer a mix of steady

returns & growth. The balanced fund will invest 30% to 50% in the fund and 50%

to70%in the debt fund.

Cash fund – The cash fund will invest conservatively in money market & short –term

investments to ensure that return on investments shall never be negative. 100% of this

fund will be invested in money market instruments.

SITAMS25

Comparative Study of Bajaj Allianz Life Fixed Plan With HDFC Unit Linked Youngster

Plan With Bajaj Allianz Gain Plan

Particular Rs Kotak Life

Insurance

Bajaj Allianz HDFC Standard

Premium Min Premium Rs.10000

Min Premium 10000

Min Premium

Rs.10000

Mode Of Payments Quarterly, Half Yearly, Yearly

Monthly, Quarterly, Half Yearly, Yearly

Quarterly, Half Yearly, Yearly

Payment Of Premium

In Cash ,Local Cheque,Standing Instruction Of Electronic Clearing System(Ecs Facility Is Limited In Cities)

In Cash, Local Cheque, Dd, Standing Instruction Of Electronic Clearing System (Ecs Facility Is Limited In Cities)

In Cash, Local Cheque, Dd Standing Instruction Of Electronic Clearing System

Sum Assured They Can Choose By There Own

Minimum Of 5 Times Of Annual Premium

Minimum Of 5 Times And Maximum Of 20 Times Of Annual Premium.

Benefit

Death Benefit The Beneficiary Would Receive Sa2 Plus The Marker Value Of The Units, Less Unpaid P2 Premium.

Higher Of The Sum Assured Less Any Withdrawals Of The Bid Price. If The Age Of The unsure Person Is Less That 7 Or Above 70 Then Bid Price Of Units Paid

Greater Of Your Sum Assured (Less Any Withdrawals You Have Made) Of Total Fund Value To Your Family. And Policy Terminates

Critical Illness Benefit

On The First Occurrence Of Critical Illness During The Term Of The Plan, You

(Pending) Greater Of Your Sum Assured (Less Any Withdrawals You Have Made)Or Total Fund Value

SITAMS26

Would Receive The Rider Benefit Amount.

To Your Family . And Policy Terminates

Cash Withdrawal Option

Any Time After The Payment Of 3 Full Years Premium You May Withdraw Partial Of Complete Surrender Of Units. In Case Of Partial

Any Time After The Payment Of 3 Full Years Premium You May Withdraw Partial Of Complete Surrender Of Units. In Case Of Partial Withdrawal Minimum Balance Of Rs. 100000 (At Bid Piece )Across All Funds Must Be Maintained And The Minimum Amount Withdrawal Amount Rs.100000

Allowed At Any Time Subject To Minimum Amount Is Rs.100000.After The Withdrawal, The Fund Less Any Due Charges Exceeds Both Rs. 15000 And The Surrender Charges In Force At The Time Of Withdrawal (25%)

Investment OptionsMoney Market Fund Floating Rate Fund Gilt Fund Bond Fund Balanced Fund Growth Fund

Equity Fund Equity Gain Fund Equity Madcap Fund Debt Fund Cash Fund

Liquidity Fund

Secure Managed Fund Defensive Managed Fund Balance Managed Fund Growth Fund

Return Above 20% 18-20% 15-20%

Max. Age 75 70 15-20%

Charges 0.6% 1.25% 0.80%

SITAMS27

STATEMENT OF THE PROBLEM

In the present key competitive business world the Bajaj Allianz witnessed

significant development. The growing urbanization in the country providing huge

development of the Bajaj allianz influences the business of the motor vehicle insurance. Life

insurance etc. the Bajaj allianz life insurance company possesses certain features like control

of so financial manager must be vary collations in designing financial position. To discharge

the complicated duties, The financial manager must know how the said problems affect the

profitability of insurance company how are the profits to be managed these questions call for

a scientific examinations

SITAMS28

OBJECTIVES

To analyses the financial performance of Bajaj Allianz AG insurance

company Ltd, for year 2002-2007

To analyses the financial performance of unit linked policy of Bajaj Allianz AG

2002-2007.

To analyses various funds operated by Bajaj Allianz under Ulips policy.

To analyses the profitability. 2002-2007.

To analyses the economic growth achievement of BAJAJ ALLIANZ.

SITAMS29

RESEARCH METHODOLOGY

The study conducted is based upon information obtained from different companies of

the industry and it is annual reports which were published by the companies.

The data collection is two types.

Data collected by interviewing chief accounts officer.

Data collected from financial statements books, reports & company branches.

SITAMS30

LIMITATIONS

This study is confirmed to Bajaj Allianz Company only.

This study is confirmed to that to Ulips policies only.

The comparison is researched is difficult because of differences in situations of

existing competitor companies.

It is difficult to frame the position of entire structure due to the non availability of

existing competitor’s information exactly.

SITAMS31

SCOPE OF THE STUDY

This study attempts to analyses the financial performance of Bajaj Allianz, for the

past 4 years. Financial performance has been analysis by comparing all types of funds in

Bajaj Allianz. This study has been confined to Bajaj Allianz unit linked policy only.

SITAMS32

Date Analysis Interpretation

Current RatioTable.1

Year Current Assets(Rs.) Current Liabilities(Rs.) Ratio2002-2003 43027422 23678462 1.822003-2004 39741780 21724020 1.832004-2005 37381285 15264863 2.452005-2006 30138213 13071235 2.312006-2007 28732051 12573160 2.29

Source: Annual ReportsGraph;1

Source: Table-1

Interpretation:

The current ratio of the firm for the 5 years is shown in the above table and graph.

The ratio was ranging from 1.82 to 2.45. so the firm was maintaining required current

assets for its current liabilities. From the years 2004to 2007the ratio was above the

standard norm i.e., 2:1.

Quick Ratio:

Table-2

YearQuick Assets (Rs.)

(Current assets-Inventory) Current liabilities (Rs.) Ratio2002-2003 17053156 23678462 0.722003-2004 17432438 21724020 0.802004-2005 17300363 15264863 1.132005-2006 11319800 13071235 0.87

SITAMS33

0

0.5

1

1.5

2

2.5

Cur

ren

t R

ati

o

2002-03 2003-04 2004-05 2005-06 2006-07Year

Trends Of Current Ratio

2006-2007 10917160 12573160 0.87Source: Annual Reports

Graph.2

Source: Table-2

Interpretation:

The above table and graph shows the quick ratio of the firm for five years from

2003-2007 the ratio was ranging from 0.72 to 1.13. The firm was maintaining quick ratio

nearer to the standard norm i.e., 1:1. In the year 2005 the ratio was above the standard

norm this is due to decrease in current liabilities.

Absolute Quick Ratio:

Table-3

YearCash +Marketable

Securities(Rs.)Current

Liabilities(Rs.) Ratio2002-2003 1014124 + 701500 23678462 0.072003-2004 497598 + 701500 21724020 0.062004-2005 443581 + 701500 15264863 0.082005-2006 443775 + 701500 13071235 0.092006-2007 443385 + 701500 12573160 0.09

Source: Annual ReportsGraph.3

SITAMS34

00.20.40.60.8

11.2

Qui ck

R

at io

2002-03 2003-04 2004-05 2005-06 2006-07Year

Trends Of Quick Ratio

00.010.020.030.040.050.060.070.080.09

Cas

h R

atio

2002-03 2003-04 2004-05 2005-06 2006-07

Year

Trends of Cash Ratio

Source: Table-3

Interpretation:

The cash ratio for 5 years from 2002to 2006was in the above table and

graph. The ratio was low in all years of the study. The ratio was ranging from 0.06 to

0.09, which is very low when compared with the standard norm i.e., 1:2 or 0.5:1.

Inventory Measure

Table-4

YearCurrent Assets - Inventory

(Quick Assets)(Rs.)Average Daily Expenses

(Op.Exp-Dep) Days2002-2003 17053156 112915 1512003-2004 17432438 64174 2722004-2005- 17300363 64631 2682005-2006 11319800 67426 1682006-2007 10917160 144628 76

Source: Annual ReportsGraph.4

SITAMS35

Trends Of Invetory Measures

0

50

100

150

200

250

300

2002-2003

2003-2004

2004-2005-

2005-2006

2006-2007

Days

Source: Table -4

Interpretation:

The table and graph shows the interval measure (i.e., the firms ability to meet its

daily operations if it does not receive any cash) of the firm for 5 years. It was ranging

from 76 days to 272 days. The ratio was in decreasing trend since 2005 this is due to

increase in average daily expenses.

Debt Equity Ratio

Table-5

Year Long Term Liabilities(Rs.) Share Holders Funds(Rs.) Ratio2002-2003 133331222 24208932 5.512003-2004 136526596 5333707 25.602004-2005 145963595 -14905262 -9.802005-2006 138274921 -35028886 -3.952006-2007 141966474 -57879842 -2.50

Source: Annual ReportsGraph:5

SITAMS36

Source: Table-5

Interpretation:

The debt equity ratio of the firm was showed in the above table and

graph. The ratio was 5.51 and 25.60 in the years 2002and 2003 respectively, later it was

gone to negatives figures because the shareholders funds went to negatives due to huge

losses since 2005.

Proprietary Ratio

Table-6

YearEquity Share Holders

Funds(Rs.)Total Tangible

Assets(Rs) Ratio2002-2003 24208932 131828723 0.182003-2004 5333707 120127493 0.042004-2005 -14905262 108686879 -0.142005-2006 -35028886 92363687 -0.382006-2007 -57879842 81877407 -0.71


SITAMS

Trends Of Debt Equity Ratio

-15-10

-505

1015202530

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

Ratio

37

Source: Table-6

Interpretation:

The proprietary ratio is shown in the above table and graph for the period of the

study. The ratio was 0.18 and 0.04 in the years 2003 and 2004respectively, later it gone to

negative figures, because the equity shareholders are not having any funds belonging to

them.

Capital Gearing Ratio:

Table-7

YearFunds Bearing Fixed

Interest & Dividend(Rs.)Equity Shareholders

Funds(Rs. Ratio2002-2003 133331222 24208932 5.5075222003-2004 136526596 5333707 25.596942004-2005 145963595 -14905262 -9.792762005-2006 138274921 -35028886 -3.947452006-2007 141966474 -57879842 -2.45278


SITAMS

Trends Of Proprietary Ratio

-0.8-0.7-0.6-0.5-0.4-0.3-0.2-0.1

00.10.20.3

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

year

Rat

io

Ratio

38

Source: Table-7

Interpretation:

The capital gearing ratio of the firm was shown in the above table and graph. The

ratio was 5.5 and 25.5 in the years 2003 and 2004 respectively, later it was gone into

negatives figures due to there are no funds are belonging to equity shareholders, due to

huge losses since 2005

Fixed Assets Ratio:

Table-8

Year Fixed Assets Capital Employed Ratio2002-2003 88801301 125997768 0.712003-2004 80385713 110881618 0.732004-2005 71305594 100610502 0.712005-2006 62225474 73305592 0.852006-2007 53045356 54653558 0.97

Source: Annual Reports

SITAMS39

-10-505

1015202530

Cap

ital

Gea

rin gR

atio

2002-03 2003-04 2004-05 2005-06 2006-07

year

Trends of Capital Gearing Ratio

Graph:8

Source: Table -8

Interpretation:

The fixed assets ratio of firm for 5 years is shown in the above table and graph.

The ratio was ranging from 0.71 to 0.97. It was increasing from 2005 but it less than 1, so

the firm was raising adequate long-term funds to meet the fixed assets requirements.

Debt Ratio

Table-9

Year Total Debt(Rs.) Capital Employed(Rs.) Ratio2002-2003 133331222 125997768 1.0582032003-2004 136526596 110881618 1.2312832004-2005 145963595 100610502 1.4507792005-2006 138274921 73305592 1.8862812006-2007 141966474 54653558 2.597571

SOURCE: ANNUAL REPORTSGrapg:9

SITAMS40

0

0.2

0.4

0.6

0.8

1

Fix

ed

Ass

ets

Rat

io

2002-03 2003-04 2004-05 2005-06 2006-07Year

Trends of Fixed Assets Ratio

Source: Table -9

Interpretation:

The debt ratio for 5 years is shown in the above table and graph. The ratio was

increasing in trend; it shows that the portion of debt in the capital structure was

increasing. So debt portion is more than the equity.

Inventory Turnover Ratio

Table-10

Year Cost Of Goods Sold(Rs.) Average Stock(Rs.) Ratio2002-2003 88735466 837648 1062003-2004 40431855 150632 2682004-2005 36833098 181677 2032005-2006 14402048 196286 732006-2007 9541652 85306 112


SITAMS41

0

0.5

1

1.5

2

2.5

3

Deb

t R

ati

o

2002-03 2003-04 2004-05 2005-06 2006-07

Year

Trends Of Debt Ratio

Source: Table -10

Interpretation:

Inventory turnover ratio is calculated and shown in the above table and graph for

5 years. It was high in the year 2003 (268 times) and low in the year 2005 (73 times). It

shows that the firms inability to convert the stock into sales.

Working Capital Turnover Ratio

Table-11

Year Sales(Rs.) Working Capital(Rs.) Ratio2002-2003 89581746 19348960 4.632003-2004 53944973 18017760 2.992004-2005 49219648 22116422 2.232005-2006 18272635 17066978 1.072006-2007 12353450 16158891 0.76

Source: Annual ReportsGraph;11

SITAMS

Trends Of Inventory Turnover Ratio

0

50

100

150

200

250

300

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

Ratio

42

Source: Table -11

Interpretation:

The working capital turnover ratio is the firm for 5 years is shown in the above

table and graph. The ratio was decreasing in trend, it was 4.63 in the year 2003 and 0.76

in the year2007, it shows that the firm’s inefficient utilization of working capital

Fixed Assets Turnover Ratio

Table-12

year Net Sales(Rs.) Fixed Assets(Rs.) Ratio2002-2003 89581746 88801301 1.012003-2004 53944973 80385713 0.672004-2005 49219648 71305594 0.692005-2006 18272635 62225474 0.292006-2007 12353450 53045356 0.23

Source: Annual ReportsGraph: 12

SITAMS

0

1

2

3

4

5

Wor

kin

gC

apita

l

2002-03 2003-04 2004-05 2005-06 2006-07Year

Trends Of Working Capital Turnover Ratio

43

Source: Table -12

Interpretation:

The above table and graph shows the fixed assets turnover ratio of the firm during

the period of the study. The ratio was in decreasing trend. It was 1.01 in the year 2003

and 0.23 in the year 2007. It shows that the firm is under utilizing the fixed assets in

generating output

Debtors Turnover Ratio

Table-13

YearSales(Rs.){Credit} Debtors(Rs.) Ratio

2002-2003 89581746 16039032 5.592003-2004 53944973 16934840 3.192004-2005 49219648 16856782 2.922005-2006 18272635 10876025 1.682006-2007 12353450 10473775 1.18


SITAMS44

00.20.40.60.8

11.2

Turn

over

Rat

io

2002-03 2003-04 2004-05 2005-06 2006-07Year

Trends of Fixed Assets Turnover Ratio

Source: Table -13

Interpretation:

The debtor’s turnover ratio for the period of the study is shown in the above table

and graph. It shows a decreasing trend. It was 5.59 in the year 2003and 1.18 in the year

2007.It shows that firms inefficient management of debtors.

Debtors Collection Period

Table-14

YearNO: Of Working Days in a

Year Debtors Turnover Ratio Days2002-2003 360 5.59 642003-2004 360 3.19 1132004-2005 360 2.92 1232005-2006 360 1.68 2142006-2007 360 1.18 305


SITAMS

Trends Of Debtors Turnover Ratio

0

1

2

3

4

5

6

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

Ratio

45

Graph: 14

Source: Table -14

Interpretation:

The above table and graph exhibits the debtors collection period for the period of

the study. The ratio is in increasing trend, it was 64 days in the year 2003 and 305 days in

the year2007. It shows that the firm was failed to collect dues from the debtors

Creditors Turnover Ratio:

Table-15

YearPurchases(Rs.)

(credit) Creditors(Rs.) Ratio2001-2002 29247740 22294037 1.312002-2003 16807425 20076999 0.842003-2004 16449922 13501536 1.222004-2005 5347331 10978377 0.492005-2006 1711249 10480302 0.16


SITAMS

Trends of Debtors Collection Period (Days)

050

100150200250300350

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

Days

46

Graph:15

Source: Table -15

Interpretation:

Creditors turnover ratio of the firm was shown in the above table and graph for

the period of study. The ratio was in decreasing trend, it was 1.31 in the year 2003 and

0.16 in the year 2007. It shows that the firm was taking more time to pay due amount.

Creditors Payment Period

Table-16

YearNo: of Working Days in a

YearCreditors Turnover

Ratio Days2002-2003 360 1.31 2742003-2004 360 0.84 4292004-2005 360 1.22 2952005-2006 360 0.49 12522006-2007 360 0.16 2250


SITAMS

Trends Of Creditors Turnover Ratio

00.20.40.60.8

11.21.4

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

Ratio

47

Creditors Payment Period

0

500

1000

1500

2000

2500

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

Days

Source: Table -16

Interpretation:

The creditor’s payment period for the period of study are shown in the above table

and also represented graphically. The ratio shows an increasing trend, it was 274 days in

the year 2003 and 2250 days in the year 2007. It means that the firm was taking more

time to pay due amount.

Capital Employed Ratio

Table-17

Year Sales(Rs.) Capital Employed Ratio2002-2003 89581746 125997768 0.712003-2004 53944973 110881618 0.482004-2005 49219648 100610502 0.482005-2006 18272635 73305592 0.242006-2007 12353450 54653558 0.22

SITAMS48


Graph:17

Source: Table -17

Interpretation:

Capital employed ratio of the firm for 5 years are shown in the above table and

graph. It was decreasing in trend during period of the study. It is 0.71 in the year 2003

and 0.22 in the year2007. it shows that the firm is not able to generate more profits.

Gross Profit Ratio

Table-18

year Gross Profit(Rs.) Sales(Rs.) Ratio2002-2003 846280 89581746 0.942003-2004 13513118 53944973 25.052004-2005 12386550 49219648 25.172005-2006 3870587 18272635 21.182006-2007 2811798 12353450 22.76

SITAMS

Trends Of Captial Employed Ratio

00.10.20.30.40.50.60.70.8

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

Ratio

49


Graph:18

Source: Table -18

Interpretation:The gross profit ratio of the company was in the above table and graph

for the period of study. In the year 2003 it was 0.94% on sales later it was more then 20%

of sales due to less cost of goods sold. Highest in the year 2005 was 25.17% on sales.

Operating Profit Ratio

Table-19Year Operating Profit(Rs.) Sales(Rs.) Ratio(Rs.)

2002-2003 -27726107 89581746 -30.952003-2004 -4516456 53944973 -8.372004-2005 -6874155 49219648 -13.962005-2006 -16626285 18272635 -90.992006-2007 -10195353 12353450 -82.53


SITAMS

Trends Of Gross Profit Ratio

0

5

10

15

20

25

30

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

Ratio

50

Graph:19

Source: Table -19

Interpretation:Operating profit of the firm for 5 years is exhibited in the above table and

graph. The ratio for period of study was always shows a negative figure, this is due to

high operating expenses incurred by firm.

Operating Expenses Ratio

Table-20

Year Operating Expenses(Rs.) Sales(Rs.) Ratio2002-2003 28572387 89581746 31.892003-2004 18029574 53944973 33.422004-2005 19260705 49219648 39.132005-2006 20496872 18272635 112.172006-2007 13007151 12353450 105.29

SITAMS

Trends Operation Profit Ratio

-100-90-80-70-60-50-40-30-20-10

02002-2003

2003-2004

2004-2005

2005-2006

2006-2007

Ratio(Rs.)

51

Source: Annual ReportsGraph: 20

Source: Table -20

Interpretation:

The above table and graph shows the operating expenses ratio of the firm for 5

years. The ratio was in increasing trend, it was 31.89 % on sales in the year 2003 and

105.29% on sales in the year 2007.SS it means that the firm incurring operating expenses

more than the sales.

Operating Ratio

Table-21

Year Cost Of Goods Sold+Operating Expenses(Rs.) Sales(Rs.) Ratio2002-2003 88735466 + 28572387 89581746 130.952003-2004 40431855 + 18029574 53944973 108.372004-2005 36833098 + 19260705 49219648 113.962005-2006 14402048 + 20496872 18272635 190.992006-2007 95416552 + 13007151 12353450 182.53

SITAMS52

0

20

40

60

80

100

120

OPE

RAT

ING

EXPE

NSE

S R

ATIO

2002-03 2003-04 2004-05 2005-06 2006-07

Year

Trends Of Operating Expenses Ratio


Source: Table -21

Interpretation:

The operating ratio of the firm was shown in the above table and graph. The

ratio was more than 100% of sales, so the firm is not getting any margin on the sales. It

130.95% on sales in the year 2003 and 182.53% on sales in the year 2007.

Non-Operating Income Ratio

Table-22

YearNon-Operating Expenses(Rs.) Sales(Rs.) Ratio

2002-2003 1614969 89581746 1.82003-2004 - 53944973 -2004-2005 624840 49219648 1.272005-2006 9425630 18272635 51.58

SITAMS53

0

50

100

150

200

Ope

ratin

g R

atio

2002-03 2003-04 2004-05 2005-06 2006-07

Year

Trends Of OperatingRatio

2006-2007 231372 12353450 1.87Source: Annual ReportsGraph:22

Source: Table -22

Interpretation:

The non-operating income of the firm is shown in the above table and

graph. The ratio was normal in all years of the study except in the year 2006 it was

51.58% on sales.

Net Profit Ratio {Profit after Tax}

Table-23

year

Net Profit(Rs.)

{PAT} Sales(Rs.) Ratio

2002-2003 -46968496 89581746 -52.43

2003-2004 -18784731 53944973 -34.82

2004-2005 -19335877 49219648 -39.28

2005-2006 -20057251 18272635 -109.77

2006-2007 -22802728 12353450 -184.59


Graph:23

SITAMS54

0

10

20

30

40

50

60

NO

N-

OPE

RA

TIN

GIN

CO

ME

RAT

IO

2002-03 2003-04 2004-05 2005-06 2006-07

Year

Trends Of Non-Operating Income Ratio

-200

-150

-100

-50

0

NET

PR

OFI

T R

ATIO

2002-03 2003-04 2004-05 2005-06 2006-07YEAR

Trends Of Net Profit Ratio

Source: Table -23

Interpretation:

The net profit of the firm for 5 years is shown in the above table and graph. The

firm is not getting any profit after tax during the period of the study due high expenses.

Finds Analysis:

1. Equity plus pension fund2. Equity mid cap fund3. Balanced plus pension fund4. Equity premium fund.

Analysis:Equity plus pension fund

Months NAV (High) Rs. NAV(low) Rs.April 2006. 13.45 12.75May 2006 14.25 13.20June2006 15.00 14.12July 2006 15.25 13.25August 2006 15.75 13.50September 2006 15.80 14.50October 2006 16.25 14.35November 2006 16.85 15.25December 2006 17.20 14.50January 2007 18.00 16.25February 2007 18.25 16.50March 2007 18.75 17.25

SITAMS55

Equity Plus Pension Fund For The Year 2006-07

02468

101214161820

NAV (High)Rs.

NAV(low) Rs.

Source: Equity Plus Pension Fund

Interpretation:

The above graph explained the NAV of equity plus pension fund was amount at

10/- the month of January 2006 But the end of the year it has raised to 17/-.

Similarly the year 2007 Jan it was at 18/- however at the end of the year it has

included in 24/-

This shows transfer performance equity premium fund and there was 100%

growth rate in the value of NAV in the year 2007compare to the NAV had provide a

value of return to all ulips investor.

SITAMS56

Equity mid Cap Fund

Months NAV (High) Rs. NAV(low) Rs.April 2006. 10.5 8.5May 2006 11.2 9.4June2006 12.6 9.7July 2006 11.7 8.4

August 2006 12.7 9.5September 2006 14.7 9.5

October 2006 13.6 9.4November 2006 13.6 9.5December 2006 14.7 9.6January 2007 12.7 9.6February 2007 14.6 8.9March 2007 13.9 9.6

SITAMS57

Equity Mid Cap Fund For Year 2006-07

02468

10121416

NAV (High)Rs.NAV(low) Rs.

Interpretation:

The above graph explained the NAV of equity plus pension fund was amount at

12.7 the month of January 2006 but the end of the year it has raised to 10.5.

Similarly the year 2006 Feb it was at13.6.

This shows transfer performance Equity mid cap fund and there was 100% growth

rate in the value of NAV in the year 2006 compare to the NAV had provide a value of

return to all ulips investor.

Balanced Plus Premium Fund

Months NAV (High) Rs. NAV(low) Rs.April 2006 12.7 9.6May 2006 13.6 10.6June2006 14.9 12.6July 2006 13.2 10.9



SITAMS58

Balanced Plus Premium Fund Year 2006-07

02468

10121416


Interpretation:

The above graph explained than the NAV of equity plus pension fund was amount

at 12.7 the month of January 2005 but the end of the year it has raised to 14.9

Similarly the year 2006 Jan it was at 13.9 however at the end of the year it has

included in 13.6This shows transfer performance equity premium fund and there was

100% growth rate in the value of NAV in the year 2006 compare to the NAV had

provide a value of return to all ulips investor.

Cash Plus Pension Premium Fund

Months NAV (High) Rs. NAV(low) Rs.April 2006 12.7 9.6May 2006 14.6 10.6June2006 13.9 9.7July 2006 14.1 10.9



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Balanced Plus Premium Fund Year 2006-07

02468

10121416


Interpretation:

The above graph explained than the NAV of equity plus pension fund was amount

at 12.7the month of January 2005 But the end of the year it has raised to 13.9

Similarly the year 2006 Jan it was at 13.8/- however at the end of the year it has

included in 14.7-

This shows transfer performance equity premium fund and there was 100%

growth rate in the value of NAV in the year 2006 compare to the NAV had provide a

value of return to all ulips investor.

Findings

After proper analysis of the financial position of the Bajaj Allianz Insurance

Company Ltd with the help of financial analysis tools, the following findings are found

during the analysis.

The company was getting the operating loss for the present 2002-

2007years.

It is found that the company getting good percentage of gross profit on

sales. This is due to less cost of goods sold.

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The operating expenses were very high in the years 2004-05 to

2006-07 in proportion to sales.

It is found that the debtors’ turnover is decreasing since last five years; it

will affect the working capital structure of the company.

It is found that for collecting debts from debtors’ was taking more time, so

the company is failed to collect dues from the debtors’,

The creditors’ turnover is very low; it means that the company is filed to

pay the credit amount to the creditors’ with in the stipulated time allotted

by creditors’. This will result in high interest charges, which adversely

affect the profitability.

The quick ratio of firm was up to standard in the year 2005 in remaining

years the firm was not maintaining quick assets to meet current liabilities.

The current ratio of the company was good, it possess 2 rupees of amount

for every 1 rupee of debt.

The outsiders’ funds are more than the equity shareholders funds in the

firm. From 2004-05 to 2006-07 the equity shareholders are not having any

funds belonging to them, Due to huge losses.

The firm has raised adequate long-term funds to meet the fixed assets.

‘Equity plus pension fund‘s NAV was Rs. 11 in the year 2005, but the current

NAV is stands at Rs. 17. Which shows the excellent performance of the

company.

Suggestion

After proper analysis of the financial position of the company and

according to the findings found in the analysis, the following are some the suggestions

recommended to the company for better performance.

It is suggested to increase the gross profit by putting efforts to reduce cost of

production or increase the sales volume of the company.

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It is suggested to take measures for collecting dues from the debtors, by

allowing discounts.

It is suggested to pay the dues to the creditors as earlier as possible, because

delay will incurs more interest charges.

It is suggested to reduce the unnecessary administration expenses in the

company, because it affects the profitability.

The company should improve its profitability position by making more number

of ULIPs and by inventory in the potential industries which provides good

returns in the investment.

The company should improve it market share by introducing variety of ULIPs

and by providing goods returns of the innovators.

The company should reduce the handling charges to have the alteration of all

the ULIPs innovator.

The company should try to maintain or return and increase their customers by

providing more goods no. of policies which leads to higher market share.

Bibliography

A Books Referred

1. Jain and Khan, Financial Management 4th edition, Sultan Chand and

Company Limited, Agra 2004

2. Kothari C.R, Research Methodology, Willy Eastern company

Limited, Kolkotta 2002

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3. Krishnaswamy O.R, Methodology of Research in Social Sciences,

Himalaya Publishing House, Mumbai 1993

4. Prasanna Chandra, Financial Management, Tata McGraw Hill

Company Limited, Delhi 2004

B. Periodicals / Journals / Reports Referred

1. Company’s Annual Report

2. Business Today

3 Economic Times

4 Journal of Finance

5 Business Standard

D. Libraries Consulted

1. Sreenivasa Institute of Technology and Management Library,

Chittoor.

STATEMENT SHOWING COMPARITIVE BALANCE SHEET FOR THE YEARS 2005 AND 2006

PARTICULARS SCHEDULE 2005 2006 CHANGE IN Rs CHANGE IN %SOURCES OF FUNDS1.SHARE CAPITAL FUNDS:a. EQUITY SHARE CAPITAL A 55351000 55351000 0 0

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b.RESERVES & SURPLUS B -70256262 -90379886 -20123624 28.642.LOAN FUNDS:a. SECURED LOANS C 116789519 120469891 3680372 3.15b. UNSECURED LOANS D 29174076 17805030 -11369046 -38.95TOTAL 1 AND 2 131058333 103246035 -27812298 -21.22

APPLICATION OF FUNDS1.FIXED ASSETS:a. GROSS BLOCK E 128744087 128744087 0 0(--) DEPRECIATION 57438493 66518612 9080119 15.81NET BLOCK 71305594 62225475 -9080119 -12.73b. ADVANCES TO CAPITAL WORKS 0 0 0 02.INVESTMENTS F 701500 701500 0 03.(I)CURRENT ASSETS,LOAN G 52228447 44161444 -8067003 -15.45(II)CURRENT LIABILITIES & PR H 23625039 33782827 10157788 42.99NET CURRENT ASSETS (I-II) 28603408 10378617 -18224791 -63.724.MISCELLANEOUS EXPENDI I 30447831 29940443 -507388 -1.67NOTES ON ACCOUNT M 0 0 0 0TOTAL 1 TO 4 131058333 103246035 -27812298 -21.22

SOURCE: ANNUAL REPORTS

In the above statement the over all performance of the firm was decreased in 2006 when compared to 2005

In sources of funds the secured loans are increased by 3.15% in 2006 when compared to 2005

Current assets are decreased by 15.44%. net block of fixed assets are decreased by 12.73%.

STATEMENT SHOWING COMPARITIVE BALANCE SHEET FOR THE YEARS 2006 AND 2007

PARTICULARS SCHEDULE 2006 2007 CHANGE IN Rs CHANGE IN %

SOURCES OF FUNDS1.SHARE CAPITAL FUNDS: a. EQUITY SHARE CAPITAL A 55351000 55351000 0 0 b.RESERVES & SURPLUS B -90379886 -113230842 -22850956 25.282.LOAN FUNDS: a. SECURED LOANS C 120469891 124412166 3942275 3.27 b. UNSECURED LOANS D 17805030 17554308 -250722 -1.41

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TOTAL 1 AND 2 103246035 84086632 -19159403 -18.56

APPLICATION OF FUNDS1.FIXED ASSETS: a. GROSS BLOCK E 128744087 128744087 0 0 (--) DEPRECIATION 66518612 75598731 9080119 13.65 NET BLOCK 62225475 53145356 -9080119 -14.59 b. ADVANCES TO CAPITAL WORKS 0 0 0 02.INVESTMENTS F 701500 701500 0 03.(I)CURRENT ASSETS,LOANS G 44161444 41654241 -2507203 -5.68 (II)CURRENT LIABILITIES & P H 33782827 40847539 7064712 20.91 NET CURRENT ASSETS (I-II) 10378617 806702 -9571915 -92.234.MISCELLANEOUS EXPENDI I 29940443 29433074 -507369 -1.69 NOTES ON ACCOUNT M 0 0 0 0TOTAL 1 TO 4 103246035 84086632 -19159403 -18.56


In the above statement the over all performance of the firm was decreased in 2007 when compared to 2006.

In sources of funds the secured loans are increased by 3.27% in 2006 when compared to 2005.

Current assets are decreased by 5.68%. Net block of fixed assets are decreased by 14.59%.

PARTICULARS SCHEDULE 2005 2006 CHANGE IN Rs

CHANGE IN %

SALES J 49219648 18272635 -30947013 -62.87

COST OF GOODS SOLD K 36833098 14402048 -22431050 -60.90

GROSS PROFIT 12386550 3870587 -8515963 -68.75SELLING & ADMN.EXPENS I 10180586 11416753 1236167 12.14DEPRECIATION E 9080119 9080119 0 0INTEREST 13086562 12856596 -229966 -1.76

OTHER INCOME 624840 9425630 8800790 1408.48

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PROFIT BEFORE TAX -19335877 -20057251 -721374 3.73

PROVISION FOR INCOME TAX 0 0 0 0

PROFIT AFTER TAX -19335877 -20057251 -721374 3.73PRIOR PERIOD ADJUSTMENT 903092 66373 -836719 -92.65BALANCE C/F TO B/S -20238969 -20123624 115345 -0.57

STATEMENT SHOWING COMPARITIVE PROFIT AND LOSS A/C FOR THE YEARS 2005 AND 2006.


In the above statement the over all performance of the firm was slightly decreased in 2006 when compared to 2005.

The sales were decreased by 62% in the year 2006 when compared to the year 2005.

The selling and administration expenses of the firm were increased by 12%.

STATEMENT SHOWING COMPARITIVE PROFIT AND LOSS A/C FOR THE YEARS 2006 AND 2007

PARTICULARS SCHEDULE 2006 2007 CHANGE IN Rs

CHANGE IN %

SALES J 18272635 12353450 -5919185 -32.39

COST OF GOODS SOLD K 14402048 9541652 -4860396 -33.75

GROSS PROFIT 3870587 2811798 -1058789 -27.35

SELLING & ADMN.EXPE I 11416753 3927032 -7489721 -65.61

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DEPRECIATION E 9080119 9080119 0 0

INTEREST 12856596 12838748 -17848 -0.14

OTHER INCOME 9425630 231372 -9194258 -97.55

PROFIT BEFORE TAX -20057251 -22802728 -2745477 13.68

PROVISION FOR I T 0 0 0 0

PROFIT AFTER TAX -20057251 -22802728 -2745477 13.68

PRIOR PERIOD ADJUSTMENT 66373 48228 -18145 -27.34

BALANCE C/F TO B/S -20123624 -22850956 -2727332 13.55


In the above statement the over all performance of the firm was decreased in 2006 when compared to 2005

The sales were decreased by 32% in the year 2006 when compared to the year 2005.

The selling and administration expenses of the firm were decreased by 65%.

STATEMENT SHOWING COMMON-SIZE PROFIT AND LOSS A/C FOR THE YEAR 2005

PARTICULARS SCHEDULE 2005 % IN RELATION TO SALES

SALES J 49219648 100

COST OF GOODS SOLD K 36833098 74.83

GROSS PROFIT 12386550 25.16

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SELLING & ADMN.EXPENSES I 10180586 20.68

DEPRECIATION E 9080119 18.44

INTEREST 13086562 26.58

OTHER INCOME 624840 1.26

PROFIT BEFORE TAX -19335877 -39.28

PROVISION FOR INCOME TAX 0 0

PROFIT AFTER TAX -19335877 -39.28

PRIOR PERIOD ADJUSTMENT 903092 1.83

BALANCE C/F TO BALANCE SHEET -20238969 -41.11SOURCE: ANNUAL REPORTS

In the above statement the cost of goods sold constitutes 74% of sales. And gross profit constitutes 25% of sales. The interest constituted 26% of sales.


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In the above statement the cost of goods sold constitutes 78% of sales. And gross profit constitutes 21% of sales. The interest constituted 49% of sales.


PARTICULARS SCHEDULE 2007

% IN RELATION TO SALES

SITAMS

PARTICULARS SCHEDULE 2006

% IN RELATION TO SALES

SALES J 18272635 100





INTEREST 12856596 70.35






BALANCE C/F TO BALANCE SHEET -20123624 -110.12

69

SALES J 12353450 100





INTEREST 12838748 103.92






BALANCE C/F TO BALANCE SHEET -22850956 -184.97SOURCE: ANNUAL REPORTS

In the above statement the cost of goods sold constitutes 77% of sales. And gross profit constitutes 22% of sales. The interest constituted 103% of sales (more than the sales).

STATEMENT SHOWING COMMON-SIZE BALANCE SHEET FOR THE YEAR 2005

PARTICULARS SCHEDULE 2005% ON SOURCES OF FUNDS

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SOURCES OF FUNDS 1.SHARE CAPITAL FUNDS: a. EQUITY SHARE CAPITAL A 55351000 42.23 b.RESERVES & SURPLUS B -70256262 -53.602.LOAN FUNDS: 0 a. SECURED LOANS C 116789519 89.11 b. UNSECURED LOANS D 29174076 22.26TOTAL 1 AND 2 131058333 100

APPLICATION OF FUNDS 2005

% ON APPLICATION OF FUNDS

1.FIXED ASSETS: a. GROSS BLOCK E 128744087 98.23 (--) DEPRECIATION 57438493 43.82 NET BLOCK 71305594 54.40 b. ADVANCES TO CAPITAL 0 02.INVESTMENTS F 701500 0.533.(I)CURRENT ASSETS,LOANS AND ADVANCES G 52228447 39.85 (----) 0 (II)CURRENT LIABILITIES & H 23625039 18.02 NET CURRENT ASSETS (I-II) 28603408 21.824.MISCELLANEOUS EXPENDITURE I 30447831 23.23 NOTES ON ACCOUNT M 0 0TOTAL 1 TO 4 131058333 100


In the above statement the secured loans constitute 89% of sources of funds. The net block constitutes 54% of the application of funds.


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PARTICULARS SCHEDULE 2006 % ON SOURCES OF FUNDS

SOURCES OF FUNDS 1.SHARE CAPITAL FUNDS: a. EQUITY SHARE CAPITAL A 55351000 53.61 b.RESERVES & SURPLUS B -90379886 -87.532.LOAN FUNDS: 0 a. SECURED LOANS C 120469891 116.68 b. UNSECURED LOANS D 17805030 17.24TOTAL 1 AND 2 103246035 100

APPLICATION OF FUNDS 2006

% ON APPLICATION OF FUNDS

1.FIXED ASSETS: a. GROSS BLOCK E 128744087 124.69 (--) DEPRECIATION 66518612 64.42 NET BLOCK 62225475 60.26 b. ADVANCES TO CAPITAL 0 02.INVESTMENTS F 701500 0.673.(I)CURRENT ASSETS,LOANS AND ADVANCES G 44161444 42.77 (----) 0 (II)CURRENT LIABILITIES & H 33782827 32.72 NET CURRENT ASSETS (I-II) 10378617 10.054.MISCELLANEOUS EXPENDITURE I 29940443 28.99 NOTES ON ACCOUNT M 0 0TOTAL 1 TO 4 103246035 100




PARTICULARS SCHEDULE 2007% ON SOURCES OF FUNDS

SOURCES OF FUNDS1.SHARE CAPITAL FUNDS:

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a. EQUITY SHARE CAPITAL A 55351000 65.82 b.RESERVES & SURPLUS B -113230842 -134.652.LOAN FUNDS: 0 a. SECURED LOANS C 124412166 147.95 b. UNSECURED LOANS D 17554308 20.87TOTAL 1 AND 2 84086632 100

APPLICATION OF FUNDS 2007% ON APPLICATION OF FUNDS

1.FIXED ASSETS: a. GROSS BLOCK E 128744087 153.10 (--) DEPRECIATION 75598731 89.90 NET BLOCK 53145356 63.20 b. ADVANCES TO CAPITAL W 0 02.INVESTMENTS F 701500 0.833.(I)CURRENT ASSETS,LOANS G 41654241 49.53 (----) 0 (II)CURRENT LIABILITIES & PR H 40847539 48.57 NET CURRENT ASSETS (I-II) 806702 0.954.MISCELLANEOUS EXPENDI I 29433074 35.00 NOTES ON ACCOUNT M 0 0TOTAL 1 TO 4 84086632 100SOURCE: ANNUAL REPORTS


STATEMENT SHOWING TREND ANALYSIS FOR THE YEARS FROM 2003 TO 2007

CHANGE IN RSPARTICULARS 2003 2004 2005 2006 2007SALES 89581746 53944973 49219648 18272635 12353450GROSS PROFIT 846280 13513118 12386550 3870587 2811798TOTAL EXPENDITURE 49429745 32220802 32347267 33353468 25845899OTHER INCOME 1614969 -77047 624840 9425630 231372PROFIT BEFORE TAX -46968496 -18784731 -19335877 -20057251 -22802728 NET BLOCK 89356757 80385713 71305594 62225475 53145356

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CURRENT ASSETS 34249622 29794405 28603408 10378617 806702

IN ' % 'PARTICULARS 2003 2004 2005 2006 2007SALES 100 60.2187113 54.95 20.3977214 13.79GROSS PROFIT 100 1596.766791 1463.65 457.36482 332.25TOTAL EXPENDITURE 100 65.18504597 65.44 67.4765124 52.29OTHER INCOME 100 -0.477223078 38.69 583.641544 14.33PROFIT BEFORE TAX 100 39.99432087 41.17 42.7036263 48.55NET BLOCK 100 89.960419 79.80 69.6371232 59.48CURRNET ASSETS 100 86.99192359 83.52 30.3028658 2.36


The sales trend of the firm was decreasing in trend. It was decreased to Rs 1, 23, 53,450 from Rs 8, 95, 81,746.

The total expenditure of the firm was decreasing in trend. It was decreased to Rs 2,58,45,899 from Rs 4,94,29,745.

In the above table it is clear that the over all performance of the company was in decreasing trend.

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